Category: Books

This new book is by sometimes Slate.com columnist and U. Penn economist Joel Waldfogel, of "Deadweight Loss of Christmas" fame.  The subtitle is "Why You Can’t Always Get What You Want."

This well-written monograph is the best extant non-technical treatment of fixed costs and how they limit product diversity.  On a given night, you can’t see a live performance of Samuel Beckett in Topeka, Kansas but maybe you can in the larger New York City; fixed costs are why they won’t set up the stage and hire the cast for only five viewers.

But Waldfogel is more pessimistic about the market than I am.  The book’s opening example is about how hard it is to find radio stations in underpopulated areas; satellite radio is mentioned on p.120 but I would have started with its reach and also its limitations (and here).  There is internet radio as well.  The first example in the empirical chapter is that it takes $900 million on average to develop a new drug, but regulations and the FDA are not mentioned.

I can recommend this book but I do not agree with its central conclusion: "Markets do not avoid the tyranny of the majority."  There are very few areas of my life, if any, where markets force me to follow the wishes of the majority.

Oddly the biggest problem is not mentioned and that is style and marketing.  Retail outlets do not carry many items, not because they couldn’t hang some of the stuff from the ceiling, but rather because they wish to project a focused image.  In other words, the real problem, when there is one, is the very limited attention spans of the consumers and the ad watchers and the product line gossipers.

Here is one summary of the book’s contents.  Here is Greenspan on Rand.  Here is the WSJ review.  Here is Paul Krugman on the book.  Here is Brad DeLong’s review.  You’ll get my thoughts soon.

Arrived is soon: The book is just boring, there is no reason to buy it, or so says my pre-lunchtime scan at Borders.

The idea that shapes can be cognitively melted down into schematic blobs skewered on axes originally came from a theory of shape recognition by the computational neuroscientist David Marr.  Marr noted how easily people recognize stick figures and animals made from pipe cleaners or twisted balloons, despite their dissimilarity from real objects in their arrangement of pixels.  He proposed that we actually represent shapes in the mind in blog-and-axis models rather than in raw images, because such a model is stable as the object moves relative to the viewer.

Yes indeed, Steven Pinker has a new book out.

The final section of Greg’s book has many fascinating bits, but I would rather conclude by summing up why the book is important.

The Industrial Revolution, or whatever it was that happened, is the
big question in Western history.  Yet most economists do not work on it
and I believe that most have never read a book on it or taken a course
on it.  Greg’s work puts this historical development back on center
stage where it belongs.  Furthermore he helps reconceptualize what the
Industrial Revolution really was and wasn’t; without that step further
progress is not possible.

But that’s not all.  When it comes to what happened, Greg brings two
new interrelated but distinct hypotheses to the table, namely labor
quality and downward mobility.  That’s two new hypotheses, and
he makes a good case for each of them.  That achievement holds up even if you are unconvinced by his
dismissal of institutions, or by his embrace of the Malthusian model.

As I read Greg, he wants to replace extant explanations with his story.  In my creative "rereading" of Greg, I want to add
his two factors to extant explanations.  Greg wants an explanation with
a Malthusian or a Ricardian rigor and logic.  I believe our
explanations will be more like those of history than of economics. 
That means lots of variables, lots of messiness in the causal chains,
unclear predictive power, and the accretion of knowledge bringing less
rather than more simplicity.

In short, Greg is more of an economist than I am.

Most of all, I’d like to thank Greg for his participation in this BookForum.  Here are links to previous MR posts on his book.

In sum, what did you all think?

By me (who else?), interviewed by the ever-acute Russ Roberts (who else?), get it here. 

Among other things, I let on which is my favorite art museum and why, and what is wrong with the National Gallery of Art.  And how I have rediscovered my Austrian subjectivist roots.  And which remark in the book I meant as a joke, but everyone took seriously. 

Get the book here.

The world’s most beautiful libraries, amazing photos, and this picture of course is from Glasgow.  Portugal and Brazil do surprisingly well in this category.  But how about that Berlin library shown in Wings of Desire?

Here is the link, excerpt:

It stands apart from its predecessors by making its revelations not so
much about the way the world works as about the way we ourselves work
(and play) and how we can take practical steps to do both better.

Or:

The version of economics advanced here has nothing to do with algebra
or interest rates.  It is economics in Ludwig von Mises’s formulation of
a “logic of choice”.

Thanks to numerous loyal MR readers for the pointer.

We’ll do the final segment next Wednesday, also prepare your general thoughts on the book as a whole.  Like Arnold Kling, I’ve been very happy with the experiment and we’ll do another one; it is important to do just the right book.

For a novel about memory, the plasticity of the novel’s narrative was one of its most realistic elements.  Proust was always refining his fictional sentences in light of new knowledge, altering his past words to reflect his present circumstances.  On the last night of his life, as he lay prostrate in bed, weakened by his diet of ice cream, beer, and barbiturates, he summoned Celeste, his beloved maid, to take a little dictation.  He wanted to change a section in his novel that described the slow death of a character, since he now knew a little bit more about what dying is like.

That is from the new and quite interesting Proust Was A Neuroscientist, by Jonah Lehrer.

Here is a new list from The Guardian (I’ll second the call for Alasdair Gray’s Lanark).  Here is an only slightly older list from New York magazine, I like David Markson too.

…comes again on the question of science.  He points out correctly that most of the major technological innovators did not get much for their efforts.  Clark therefore does not see the late 18th century or early 19th century as giving special incentives for science.  I agree as far as he goes, but I view the incentives for science more broadly.

Core Europe, starting in late medieval times, developed a new and still poorly understood organizational technology.  This was, very roughly, the ability to work in groups, cumulate technologies and advances, and learn from each other in competitive environments.  Most notably, this new technology led the Florentine and Venetian Renaissances, especially in the visual arts.  But there was more.  The rise of printing.  The rise of classical music, starting in 1685 or whenever.  The rise of early modern philosophy.  Europe goes crazy with inventiveness, albeit in splats and bursts.  (Clark’s own chapter 12 gives good evidence for this tendency, though it will play a less central role in his version of the story.)

It is also the case that most of these bursts of inventiveness didn’t do much for the average standard of living.  Yes mastering oil paint technique made Florence richer but not so much.

It just so happened that one of these bursts came in science, technology, and engineering.  And it came in England, mostly for reasons of "national character."  It just so happened that the English burst did more for the standard of living, for reasons of external benefits.  But having had such a burst was not unique to England.  England was just one spoke on a more broadly turning wheel, and a European distribution of bursts was well in place prior to most of the special conditions we might find in England.

England, by the way, also had the literary revolution of the 18th century, and England plus Scotland drove the rise of modern economics.  There is no Chinese Adam Smith and that is because that Europe was pulling decisively ahead in ideas production.  I consider this a fact of great importance whereas for Clark it is a sideshow to some other story.

Most generally, I see the historical problem of growth through the lens of culture — in the sense of the history of the arts, music, and letters — more than through the economic history literature.  I am very taken by Max Weber’s writing on Western music and also his conception of the broader style of Western rationality.  And I see the rise of these organizational improvements as a central — the central? — story of early modern Europe and the move to prosperity.  It simply took a long time to apply these organizational movements to science, and to turn that science into concrete technical advances.

None of this need contradict Clark and indeed you will find parts of this narrative in his book.  But unlike Clark I would not superimpose this on a broader Malthusian story or an emphasis on the long run.  Nor am I putting much stock in genetic evolution.  So these organizational/technological improvements, in my view, move closer to the center of the story of European progress.

Unlike Clark, I think incentives to create matter greatly, but not through patents or other direct pecuniary rate of return effects.  The great creators have a burning desire to create, provided they have the opportunity to do so.  This new European technology of organization (whatever it should be called), combined with growing wealth for the upper classes, meant that such creative opportunities were far more available than ever before.  And powerful intellects grabbed them, for reasons of psychic incentives.  So incentives are paramount to the European story, while Clark remains correct in criticizing the standard account of how those incentives might have mattered.

I also see England has having innovated with the quality of its state in particular its fiscal grounding.  I wish this played a larger role in Clark’s account although of course I understand why it does not.  Institutions are not allowed to become a competing force on center stage.  The economic returns from colonies might be given more play as well.

Overall I am willing to accept many of Clark’s arguments, but I always go back to wanting to superimpose a broader institutional story on his microfoundations.

He resists that move, and that is the major place where I part company with him.  I think he is too intent on pushing institutional and ideological factors off the stage; I am happy to allow Clark’s factors on the stage — most of all gradual growth downward mobility and quality of labor — but I want a very busy and cluttered stage.

I believe, by the way, that if Clark’s vision were correct, Australia and New Zealand would be stronger economic powerhouses than has turned out to be the case.

The subtitle is How the New Science of Neuroeconomics Can Help Make You Rich, written by financial journalist Jason Zweig.  I enjoyed the content of this book, and would recommend it as a stimulating source of ideas, but with some caveats:

1. The new science of neuroeconomics cannot help make you rich, unless perhaps you have inherited a scanner and then rent scanner time to neuroeconomists (often $500 an hour or more).  Or unless you decide to simply buy and hold, compared to some other foolish plan you might have had.

2. I would have liked more emphasis on the tentative nature of neuroeconomics results.  Most studies have very few data points (see #1).  And if human choice is so context-dependent — a message of the book — doesn’t it matter if people are removed from their normal environment, told they are in an experiment, and subjected to a loud, whirring machine?

3. What does it really mean if some part of your brain lights up?  Who really knows?

4. The book mixes in results from experimental economics, surveys, and field experiments.  That’s fine, but if the neuro results had to stand alone on an open plain they would look less impressive.

I genuinely am a fan of neuroeconomics, but in the interests of science it’s important not to oversell it.

So few other people sample books en masse, yet the practice strikes me as trivially correct.  If I buy a book the odds that I finish it are reasonably high, certainly above fifty percent.  Why spend the money on a longshot?  (Btw, "What I’ve Been Reading" is almost always books I have finished, otherwise why report them?)  But when I troll a public library for free books, which I do virtually every day, should I pick up only those books I expect to finish?  No, I slide further along the marginal benefit curve and that means I grab lots of books with relatively small but positive expected values.

Yesterday’s haul from Arlington Public Library included You Never Call! You Never Write!, and Otherwise Normal People: Inside the Thorny World of Competitive Rose Gardening, neither of which I expect to finish (though I will if I love them).  The real question is should I read more on-line book reviews (which are free), or do my own "reviews" by pawing the free book for a few minutes? 

What are other reasons not to sample?  Are library trips so costly?  Are you so confident in social filters relative to your own judgment/pawing?  Have blogs outcompeted book pawing?  Is the goal of reading simply to share impressions with other people, and there is little uncertainty about what are the hot-selling books?

I say go and grab, go and grab, go and grab.